In discussion - Gerold Keune, KHD Humboldt Wedag

One of KHD's workshops in India. 2017 was the first year that KHD employed more staff in India than it did in Germany.

Schematic of the KHD Pyroredox calciner for reduction of NOx.

KHD Humboldt Wedag is a publicly-held German supplier of equipment for the global cement sector, predominantly pyroprocessing systems and grinding plants. Focused almost entirely on the cement sector, the firm doubled its order intake in 2017 compared to 2016 by focusing on its core competencies. Orders have increased further so far in 2018, as the company gains success by constantly adapting to changing market requirements. Global Cement recently caught up with KHD’s CEO Gerold Keune to discuss the company’s origins, products, challenges and opportunities...

Global Cement (GC): Please introduce KHD for readers who may be unfamiliar with the company.

Gerold Keune, CEO, (GK): KHD Humboldt Wedag traces its history back to its founding in Cologne, Germany in 1856. Since its early years, it has been an innovation leader and consequently, a major contributor to the development of Germany’s reputation as a centre for engineering excellence and high quality industrial equipment.

The company has always focused on leading in terms of the technical solutions that it offers to clients, especially in terms of benefitting the environment through energy efficiency. KHD is a pioneer of energy efficient industrial solutions.

Looking specifically at the cement sector, KHD brought major technical innovation to the industry. From the invention of the preheater system and the Pyrorapid® kiln on two-piers, to the introduction of the roller press and the wear-resistant stud-lining-surface, most of KHD’s inventions and contributions are industry standards today.

In the 19th Century, the company focused on mining and extraction industries in Germany and nearby European countries. At the beginning of the 20th Century, KHD became part of a bigger conglomerate that was diversified across a wide range of sectors. This grew to include trucks, diesel engines, agricultural equipment and more.

However, towards the end of the 20th Century, the emphasis shifted away from generalists to companies that could offer specialised solutions to individual markets. In line with this trend, KHD separated from the conglomerate at the end of the 1990s and returned to its initial focus of building materials and mining. Now, in the 21st Century, we are focused clearly on the cement sector, with a small side-line in mining,

GC: Where are the main company offices and manufacturing locations?

GK: The headquarters are since inception in Cologne, Germany, where we also have our Centre of Excellence for product development and process optimisation. We serve our clients from five customer service centres: 1. Atlanta, USA, which takes care of North and South America; 2. Cologne, Germany, which looks after Europe, the Middle East, Africa and Asia Pacific (not India and China); 3. Dessau, Germany, which takes care of Russia and the Commonwealth of Independent States (CIS); 4. Delhi, India, which is focused on India and neighbouring countries and; 5. Beijing, China, which is concerned with mainland China.

Each service centre is capable of providing all of the different types of equipment that KHD supplies. Unlike some other companies, we do not specify that certain countries ‘should have’ certain pieces of equipment. Often we find that, far from specifying simpler pieces of equipment, developing regions are keen to get the latest technologies to help them to catch up with the established markets. We want to support them to do this.

GC: How many employees are there?

GK: Worldwide KHD has around 700 employees, with more than 300 based in Delhi and a few less than 300 based in Germany. 2017 was the first year that we employed more people in India than in Germany. This is due to quite a big expansion in our manufacturing capability in Delhi by more than 100%. We were able to double our order intake in 2017 to almost Euro200m based on this. We have seen further increases in the first half of 2018 that will be reported upon in due course.

The remaining employees are located in the other two Customer Service Centres and in our sales offices around the world.

GC: How important is the cement sector to KHD?

GK: The cement sector represents more than 95% of all orders, so it is very important indeed! We are dedicated to meeting the needs of our customers in that industry and we are committed to delivering the right solutions in the modern marketplace.

Some might argue that this is risky from a diversification point of view but I am personally convinced that, if you want to be excellent these days, you have to be clearly focused on your market. When a given sector is providing fewer orders, the reaction of a big conglomerate is often to leave that sector. If our sector is seeing fewer orders, we have to do something! How do we focus on providing even better solutions? How can we make our products and services better, even in the worst of times? These are the kinds of questions that, when answered successfully, position companies well for the better times that will follow afterwards.

The remaining share of KHD’s orders are from other sectors. We are approached by a range of industries, usually those with a need for comminution equipment, separators and other individual pieces of equipment. This includes the minerals sector, for example.

GC: What are KHD’s main areas of expertise within the cement sector?

GK: KHD has its core competencies in pyroprocessing and grinding. We have several thousand references in crushing and grinding applications and close to 1000 rotary kilns, 500 preheaters and more than 350 roller presses.

We have always focused on where we can give the most added value. This is evident in KHD bringing the roller press to market, the most energy-efficient way to grind raw materials, cement and slag. KHD was also the first to come up with the suspension preheater. Today this is the standard equipment in a clinker production line.

When KHD is asked to supply a complete production line, we have no qualms to work with specialised companies for, say, conveyors, bagging plants or silos. As such we can offer our customers excellent technology at a competitive price. So you see again: it helps to be clearly focused.

GC: Once an order for a roller press for example comes in, what happens next?

GK: For raw material grinding, the first thing to do is perform a grinding test using the client’s proposed feed material at our test laboratory in Cologne. We also have a pilot plant size roller press, which helps define the parameters of the equipment required. For clinker or slag grinding we can also size on general requirements and experience. Based on the results of the tests / calculations, we can start to work on the process design to achieve the desired throughput and identify what other pieces of equipment are needed. From there on, we prepare the layout and the general arrangement, as it will be fitted into the plant and then generate all manufacturing drawings. The fabrication will then take place in Germany, India or other countries that suit the customer.

As the aforementioned steps show, based on our standardised machinery we always design a customised solution that fits the unique requirements of each client. This way we help our customers to operate their plants at the most efficient point.

GC: How long does it take between order and commissioning?

GK: For a roller press grinding plant, this period can be as short as 12 months. Clinker lines can be provided with lead times of 18 months or even less.

GC: How does KHD work during installation of a smaller project?

GK: Typically we send supervisors for erection and commissioning and our clients complete the installation with local teams. For some regions we also provide the erection and construction team, if the availability of qualified labour is limited. Looking at Africa most of our clients want a full service from KHD. In India, by way of contrast, we often have clients with their own in-house staff that install the equipment or other parties that they prefer to use on a cost basis.

GC: What about a full-line project?

GK: When it comes to installation of a full engineering, procurement and construction (EPC) line we will work with our main shareholder, AVIC of China. Indeed, these days the full line EPC scene is dominated by Chinese suppliers. Just recently another major European supplier came to an official agreement with a leading Chinese supplier to work together on an EPC project.

KHD’s business strategy is to focus on proprietary technology and continue to supply customers with unique solutions, for example pyroprocessing lines that have the best thermal and electrical efficiency. Another response of ours has been to focus on smaller projects and brownfield sites. Indeed, up to now in 2018 around 50% of our order intake comes from brownfield projects.

GC: Does that mean that Chinese suppliers have ‘won’ against European EPC suppliers?

GK: I think if you use terms like ‘win’ and ‘lose’ then you are bringing an unhelpful attitude to the table. The reality is that the market has become much more challenging for cement producers over the past 10 - 12 years. This has impacted upon suppliers like ourselves. GDP growth rates and increases in cement production are not what they once had been forecasted and the number of greenfield cement plant orders has fallen drastically. Just look at the situation in China, where the emphasis is now on consolidation and environmental performance, not new plants. Now the major Chinese EPC contractors are gaining more contracts internationally, just as greenfield projects are drying up.

Companies like KHD have to emphasise the value that they can add to their customers’ projects. Due to our technical expertise and capability, we are able to upgrade or modernise any existing plant, regardless of who built it or when it was built. Such a service is not offered by a lot of other suppliers in our industry. Every day we challenge our equipment, challenge our process and challenge ourselves to improve. This challenge is reflected in our improved order intake and high customer satisfaction.

GC: Which world regions are performing best for KHD at present?

GK: India is our largest single market, with around 25% of total orders in 2017. The whole of the rest of Asia provided 27% of orders, Africa provided 18%, Europe 17%, Russia and CIS 5% and the rest of the world 8%. We have quite a balanced global footprint.

GC: How has that split changed of late?

GK: There was a time when some markets were much more dominant, for example Russia before sanctions and India, which used to be even more important for us.

On the growth side, some countries in Africa are picking up at the moment, as is Europe, where we have several brownfield projects. A lot of plants in Europe are getting old and the owners are faced with the choice of modernising them or shutting them down. Having just said that KHD has seen an overall decline in business in India of late, we may be switching back to moderate growth there. There is also a lot of potential in Russia and we think this could start to pick up in the next couple of years. After a near 50% drop in cement consumption, the situation in the US has recovered significantly too.

GC: Do different markets ask for different types of equipment?

GK: In terms of equipment we see global interest for our pyroprocessing systems due to their high energy efficiency and environmental friendliness. When it comes to the roller press there are different levels of interest at the moment. They are most popular in India, where producers are often more advanced than many in the search for efficiency. There are still many countries where vertical roller mill technology or even ball mills are preferred. However, due to the obvious advantages of roller presses in terms of energy consumption and efficiency, we are very confident that the adoption of the technology will continue to gain momentum.

GC: As part of KHD’s constant improvement, what new pieces of equipment are in the pipeline?

GK: Obviously I can’t give away information on our new ideas that are due for the near future. However, we brought some innovative solutions to market in 2017. For example the first Pyrorotor®, a drum reactor for processing very coarse pieces of alternative fuel of up to 300mm in length. Our technology drastically reduces the need to prepare alternative fuels to a high standard and thus, eliminates a major argument against the use of such alternative fuel opportunities.

Another recent development is the Pyroredox® technology, a special calciner for reduction of NOx (seen left). In more and more markets there are strict limits on NOx emissions. As end-of-the-pipe technologies, SCR and SNCR have high investment or operational costs and there is the potential for ammonia slip too, which is also subject to limits. Instead of acting on NOx in the exhaust duct, the Pyroredox® actively reduces the emissions within the process by introducing a small amount of fuel at low temperature in a sophisticated tube reactor. This transforms NOx and CO to N2 and CO2.

GC: We’ve already mentioned KHD’s recent expansion in India. Are there any further expansion plans at the moment?

GK: This is always on the radar and we constantly think about possibilities to grow the company. However, I am not in a position to speak on this topic at this time.